An attendee holds a Titan Bitcoin silver minted coin during the Inside Bitcoins conference in New York on April 7. / Jin Lee, Bloomberg

by Kevin Johnson, USA TODAY

by Kevin Johnson, USA TODAY

WASHINGTON - U.S. Attorney General Eric Holder warned Tuesday that virtual currencies, including the increasingly popular Bitcoin, may be used to "mask'' money laundering associated with drug trafficking or other illegal activities.

"Virtual currencies can pose challenges for law enforcement given the appeal they have among those seeking to conceal illegal activity,'' Holder told the House Judiciary Committee. "This potential must be closely considered. We are working with our financial regulatory partners to account for this emerging technology.''

Bitcoin is a decentralized digital currency that is traded mostly online and person to person rather than through banks. The unregulated cybercurrency has been gaining popularity in the USA and accepted as payment at scores of businesses.

"Those who favor virtual currencies solely for their ability to help mask drug trafficking or other illicit conduct should think twice,'' Holder said. "The department is committed to innovating alongside this new technology in order to ensure our investigations are not impeded by any improvement in criminals' ability to move funds anonymously.

"As virtual currency systems develop, it will be imperative to law enforcement interests that those systems comply with applicable anti-money laundering statutes and know-your-customer controls.''

The attorney general's currency assessment was part of a wide-ranging -- and briefly contentious -- congressional hearing on Justice operations.

Although it has been nearly two years since the Republican-led House voted to hold Holder in contempt, time apparently has not healed all wounds.

"You don't want to go there,'' Holder told Gohmert, referring to the 2012 dispute over the administration's handling of a botched gun trafficking investigation that resulted in the contempt finding. "It was inappropriate; it was unjust.''

Holder's remarks prompted a heated response from Gohmert: "I don't need a lecture from you about contempt.''

"And I don't need a lecture from you, either,'' Holder said.

The clash ended, at least for now, when Gohmert's time for questioning expired.

On an unrelated matter, Holder acknowledged that a federal inquiry continues involving former CIA director David Petraeus.

Holder said federal authorities are "working diligently to resolve'' the matter involving Petraeus, who was forced to resign in 2012 after admitting to an extramarital affair. Authorities have been investigating whether classified information in the former director's possession had been compromised.